Published on 19 February 2025

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Midstream Energy Market Update H1 2025

Published on 19 February 2025

Global energy markets face shifting dynamics in 2025, with US natural gas rebounding, European investment in gas imports, and Middle Eastern LNG expansion. Insurance trends show midstream market softening, with increased capacity and rate reductions benefiting buyers.

From a holistic energy perspective, the global oil and gas industry is poised to experience varying fluctuations in demand and investment depending on geographic locations. In the US, the oil market is expected to maintain a steady trajectory in 2025. The natural gas sector is anticipated to improve with the potential easing of federal tax burdens and regulatory red tape under the new administration. Increased liquefied natural gas (LNG) export capacity will drive demand, supporting gas prices, which will also be influenced by winter weather and inventory levels. Natural gas production, previously curtailed due to low prices, is likely to resume, benefiting midstream operators and those with natural gas infrastructure. The long-term outlook for US natural gas demand growth remains positive, driven by increasing exports and domestic power generation needs. In Western Europe, environmental pressures continue to hinder investment in oil and gas exploration. Countries are instead investing in gas import infrastructure, such as pipelines and LNG terminals, to secure non-domestic gas supplies from Africa and the GCC countries. Central and Eastern Europe exhibit fewer environmental pressures, with notable gas developments such as the Sakarya Gas Field in Turkey and Europe’s Cassiopea Field.

The Middle East remains a hub for major gas producers, with Saudi Aramco and ADNOC increasing gas exports to Europe. Qatar continues to develop rapidly with the development of the North Field located in the Arabian Gulf and the expansion of its LNG fleet, which is rumored to increase to 128 vessels by 2030.

Ongoing geopolitical conflicts, particularly the Russia-Ukraine conflict, continue to impact the global oil and gas market, leading to sanctions and shifting gas supply chains to Norway and the Middle East. However, conflicts in the Middle East also affect global gas prices, with security concerns driving price volatility.

2025 Outlook: Insurance Market Trends

2024 marked a pivotal moment for the midstream energy insurance market, with a shift from a hardening market to softening conditions by year-end. Initially, accounts saw modest rate increases between 2.5% and 10%, but these increases tapered off as the year progressed.

Profitable performance and market overcapacity in the upstream sector prompted underwriters to seek premium income from midstream businesses. This introduced new capacity and downward pressure on midstream rates. Additionally, benign loss activity in recent years contributed to this trend, with the steady decline in the Canadian wildfire loss reserves and the large midstream losses suffered in 2022 by Oneok and Freeport LNG becoming distant memories.

As upstream underwriters continue to pursue midstream business, brokers will be navigating an increasingly competitive market environment, and the resulting softening rating cycle. It is anticipated that clean, straightforward midstream renewals will benefit from rate reductions of 5% to 10%, with some pressure on policy conditions, particularly coverage extensions. The rating environment is certainly in favor of buyers.